Abbott’s Drug Spin-off Gets a Name

By Christopher Weaver

Abbott Laboratories today christened the pharmaceutical division it will spin off into a separate, publicly traded company later this year: AbbVie (Abb-vee), a mashup of the parent’s moniker and the Latin word for life, plus, an endearing diminutive.

The parent company, which will sell nutritional products, branded generic drugs, medical devices and diagnostic products, will keep the 124-year-old Abbott name and CEO Miles White, even as it parts with its historic business of discovering, developing and marketing new drugs.

AbbVie will take with it the arthritis drug Humira, which is expected to be the top-selling drug this year with almost $9 billion in projected sales, along with brands like Lupron, for prostate cancer, and Synagis for treating a respiratory virus. Abbott’s top drug executive, Richard Gonzalez will become CEO of the new company.

Investors had worried the new company might be a lemon when the spin-off was announced at an October investors’ meeting, as it faces challenges like the 2016 expiration of Humira’s patent, a drug that represents nearly half of the drug divisions sales. One reason for the spin-out, analysts believe, was to separate the rest of the company from that liability.

But, as the spin-out nears, with business filings detailing AbbVie’s future assets expected by the end of June, the tenor has changed a bit. Promising signs, such as the licensing of a new arthritis drug last month and anticipation of new data expected this week for a forthcoming Hepatitis C treatment, could ease concerns about “heavy dependence on Humira,” wrote Wells Fargo analyst Larry Biegelsen in a note to investors last week.

Choosing the name is an important step toward birthing the new company. Aside from branding, the company has to begin registering Internet-domain names, and start incorporating business entities in places where AbbVie will operate, says Kelly Morrison, a company spokeswoman. She says the company retained an outside consultant to help choose the name, but wouldn’t disclose the firm.

Some Abbott employees took to tentatively calling the new company Costello, after the comedy duo Abbott and Costello, in the months after the firm announced it would spin out the proprietary drug division, a name also favored on WSJ’s health and science desk.

But, the new name also reflects the close ties the company is expected to maintain with its parent. “It preserves the heritage,” says Morrison.

The ties don’t end there. The plan is for AbbVie to cohabitate with Abbott on the current company’s main campus just north of Chicago, and it will take with it roughly 45% of the company’s revenue, an unusually large chunk of a firm to spin off, management experts say.

Reaction to the new name was mixed.

Michael Luby, head of pharmaceutical consulting firm BioPharma Alliance, tells Dow Jones Newswires that Abbott was smart to retain a link to its own identity, rather than select a completely new name. But Angela Riley, strategy director at brand consultant Wolff Olins, says “AbbVie” lacks an element suggesting that Abbott is on the cutting edge of drug research.

As for the Latin, one scholar was a bit puzzled. Julia Nelson Hawkins, an assistant professor in the Greek and Latin department of Ohio State University, said the Latin root for “life” would be either “vit” or “viv.” These are roots of the words “vita” and “vivus,” or “life” and “alive.”

Nelson Hawkins said “vi” by itself actually means “by force” or “by violence” — probably not the connotation Abbott is going for. However, she noted that “vie” means “life” in French, a language that evolved from Latin.

Morrison said the company intended the “Vie” part of the new name as a reference to the Latin “vit,” for “life,” as well as the French “vie.”